QUALIFIED STOCK OPTION AGREEMENT
THIS
AGREEMENT (this “Agreement”), is effective as of the 25th
day of April, 2007 (the “Grant Date”),
between
Manchester Inc. (the “Company”), and Xxxxxxx
Xxxxxxx (the
“Optionee”).
WHEREAS,
the Board of Directors has determined that it is in the best interest of the
Company to provide additional incentive to selected directors, officers,
employees and consultants of the Company; and
WHEREAS,
the Company desires to grant to the Optionee an Option (as defined below) to
purchase shares of its common capital stock under and for the purposes of the
Company’s 2006 Equity Incentive Plan (the “Plan”); and
WHEREAS,
the Company and the Optionee understand and agree that any terms used herein
have the same meanings as in the Plan.
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option.
Effective as of the Grant Date, the Company hereby grants to the Optionee the
right and option (the “Option”) to purchase all or any part of an aggregate of
100,000
shares (the
“Shares”) of the Company’s common stock, par value $.001 per share (the “Common
Stock”), subject to, and in accordance with, the terms and conditions set forth
in this Agreement.
2. Purchase Price.
The
price
at which the Optionee shall be entitled to purchase the Shares upon the exercise
of the Option shall be US$3.50
per Share.
3. Exerciseability
of Option.
The
Option shall vest in accordance with the following schedule and become
exercisable with respect to the following number of the shares covered by the
Option so long as Optionee remains employed by the Company or continues to
serve
the Company in a consulting capacity as of each such vesting date: 50% of the
Shares shall vest on the six month anniversary of the date of this Agreement
and
the remaining 50% of the Shares shall vest on the twelve month anniversary
of
the date of this Agreement.
4. Duration of Option.
(a) The
Option shall be exercisable to the extent vested and in the manner provided
herein until the fifth anniversary of the date hereof so long as Optionee
remains in good standing with the Company as an employee or continuing in
service as a consultant to the Company. In the event the Optionee is an employee
of the Company and such employment of the Optionee is terminated for cause,
the
Option, whether or not exercisable, shall terminate on the effective date of
the
Optionee's termination of employment. If the employment of the Optionee is
terminated for any reason other than cause, the Optionee may at any time within
ninety (90) days after such termination of employment (but in no event beyond
the expiration of the stated term of the Option), exercise the Option to the
extent, but only to the extent, that the Option or portion thereof was
exercisable on the date of the termination of employment, after which time
the
Option shall terminate in full. Nothing in this Agreement shall be interpreted
or construed to confer upon the Optionee any right with respect to continuance
of employment or consulting arrangements with the Company, nor shall this
Agreement interfere in any way with the right of the Company to terminate the
Optionee's employment or consulting services at any time.
(b)
Notwithstanding
any provision to the contrary herein, in
the event of Optionee's death, his Option shall terminate on the date of death,
provided that all or a portion of the Option to the extent that the right is
exercisable but not exercised on the date of death may be exercised by
Optionee’s survivors. Such Option must be exercised by the Optionee’s survivors,
if at all, within six (6) months after the date of death of Optionee or, if
earlier, within the originally prescribed term of the Option, notwithstanding
that the decedent might have been able to exercise the Option as to some or
all
of the shares on a later date if the Optionee were alive and had continued
to be
a Optionee of the Company or of an affiliate thereof.
5. Manner of Exercise and Payment.
5.1 Subject
to the terms and conditions of this Agreement the Option may be exercised by
delivery of written notice to the Company in the form attached hereto, at its
principal executive office. Such notice shall state that the Optionee is
electing to exercise the Option and the number of Shares in respect of which
the
Option is being exercised and shall be signed by the person or persons
exercising the Option. If requested by the Company, such person or persons
shall
(i) deliver this Agreement to an Officer of the Company who shall endorse
thereon a notation of such exercise and (ii) provide satisfactory proof as
to
the right of such person or persons to exercise the Option.
5.2 The
notice of exercise described in Section 5.1 shall be accompanied by payment
of
the full purchase price for the Shares in respect of which the Option is being
exercised, in cash or by check.
5.3 Upon
receipt of the notice of exercise and any payment or other documentation as
may
be necessary pursuant to Section 5.2 relating to the Shares in respect of which
the Option is being exercised, the Company shall, subject to this Agreement,
take such action as may be necessary to effect the transfer to the Optionee
of
the number of Shares as to which such exercise was effective.
5.4 The
Optionee shall not be deemed to be the holder of, or to have any of the rights
of a holder with respect to any Shares subject to the Option until (i) the
Option shall have been exercised pursuant to the terms of this Agreement and
the
Optionee shall have paid the full purchase price for the number of Shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered the Shares to the Optionee, and (iii) the Optionee's name
shall have been entered as a stockholder of record on the books of the Company,
whereupon the Optionee shall have full voting and other ownership rights with
respect to such Shares during the period of ownership thereof.
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5.5 In
lieu
of payment upon exercise of the Option as set forth above in this Section 5,
the
Optionee may alternatively surrender to the Company for cancellation a portion
of this Option representing that number of unissued shares underlying this
Option which is equal to the quotient obtained by dividing (A) the product
obtained by multiplying the Purchase Price by the number of shares of stock
being purchased underlying the Option upon such exercise, by (B) the difference
obtained by subtracting the Purchase Price from the closing price of the
Company's common stock on the date immediately preceding such date of such
exercise ("Cashless Exercise"); or (iii) by a combination of the foregoing
methods of payment selected by the Holder of this Option.
6. Notices.
All
notices, demands, instructions and other communications required or permitted
to
be given to or made upon either party hereto or any other person shall be in
writing and shall be personally delivered or sent by registered or certified
mail, postage prepaid, return receipt requested, or by a reputable courier
delivery service, or by telegram (with messenger delivery), or by telecopy
(confirmed by mail), and shall be deemed to be given for purposes of this
Agreement on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section. Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties
hereto, in the case of the Optionee to
the
address of record on file with the Company; and in the case of the Company,
to
the principal executive office of the Company addressed to the Corporate
Secretary.
7. Non-Transferability.
The
Option shall not be transferable other than by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as defined
in the U.S. Internal Revenue Code. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee, except in the case of an
Option transferred pursuant to a qualified domestic relations order.
8. Securities
Act Restrictions; Sales of Shares.
The
Optionee acknowledges that neither the U.S. Securities and Exchange Commission
(the “SEC”) nor any state securities commission has approved the Option nor any
Shares issuable upon exercise thereof, nor passed upon or endorsed the merits
of
this Option or the Shares; the Optionee further understands and agrees that
neither the Option nor the Shares have been registered (i) under with the SEC
under the Securities Act of 1933, as amended (the “Securities Act”) or (ii) with
any state securities commission. The Optionee understands that the neither
the
Option nor the Shares may be offered, sold, transferred or otherwise disposed
of
in the U.S., its territories or possessions, or to persons known to be residents
of the U.S. or to a U.S. person within the meaning of the Securities Act and
the
rules promulgated thereunder; provided that the Shares may be so sold after
the
earlier to occur of the effectiveness of a registration statement registering
the Shares under the Securities Act or the expiration of the restricted period
under Rule 144 promulgated under the Securities Act and thereafter only if
the
Shares are registered under the Securities Act or an exemption from the
registration requirements under the Securities Act is available. The Optionee
acknowledges that the Company has no obligation to cause the registration of
this Option or the Shares under the Securities Act. Following exercise of some
or all of the Option, Optionee agrees not to sell or transfer more than 25%
of
the aggregate of all such Shares underlying the Option during any single
calendar quarter and that the certificates representing such Shares shall bear
a
legend to such effect.
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9. Adjustments.
In
the
event of a change applicable to the entire class of shares of Common Stock,
such
as a stock split, stock dividend, or similar action with respect to all issued
and outstanding shares of Common Stock, the Board of Directors shall make
corresponding adjustments to the number of Shares subject to this Option and
the
purchase price for such Shares. For purposes of clarity, however, no adjustments
shall be made with respect to issuances of Common Stock by the Company or any
instruments exercisable or convertible into shares of Common Stock.
10. Effect of a Liquidation, Merger or Consolidation.
Upon
the
effective date of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a “Transaction”), the
Option shall continue in effect in accordance with its terms and the Optionee
shall be entitled to receive in respect of each Share subject to the Option,
upon exercise of the Option, the same number and kind of stock, securities,
cash, property or other consideration that each holder of a Share was entitled
to receive in the Transaction in respect of a Share.
11. Withholding of Taxes;
Qualified Stock Option Treatment
The
Company shall have the right to deduct from any distribution of cash to the
Optionee an amount equal to the federal, state and local income taxes and other
amounts as may be required by law to be withheld (the “Withholding Taxes”) with
respect to the Option. If the Optionee is entitled to receive Shares upon
exercise of the Option, the Optionee shall pay the Withholding Taxes to the
Company in cash prior to the issuance of such Shares. In satisfaction of the
Withholding Taxes, the Optionee may make a written election, which may be
accepted or rejected in the discretion of the Company, to have withheld a
portion of the Shares issuable to him or her upon exercise of the Option, having
an aggregate Fair Market Value, on the date preceding the date of such issuance,
equal to the Withholding Taxes. This Option shall be construed as a qualified
stock option for purposes of interpretation under the Internal Revenue Code
of
1986, as amended, and the rules and regulations promulgated
thereunder.
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12. No
Assignment.
Except
as
otherwise provided herein, the rights of the Optionee hereunder may not be
assigned or otherwise transferred to any other party.
13. Modification of Agreement.
This
Agreement may be modified, amended, suspended or terminated, and any terms
or
conditions may be waived, but only by a written instrument executed by the
parties hereto.
14. Severability.
Should
any provision of this Agreement be held by a court of competent jurisdiction
to
be unenforceable or invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall continue in full
force
in accordance with their terms.
15. Successors in Interest.
All
obligations imposed upon the Optionee and all rights granted to the Company
under this Agreement shall be final, binding and conclusive upon the Optionee's
heirs, executors, administrators, successors and (subject to Section 12 above)
assigns of the parties hereto.
16. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
17. Entire
Agreement.
This
Agreement constitutes the entire agreement, and supersedes all prior agreements,
of the parties hereto relating to the subject matter hereof, and there are
no
written or oral terms or representations made by either party hereto other
than
those contained herein. This Agreement cannot be modified, altered or amended
except by a writing signed by all the parties hereto. No waiver by either party
hereto of any provision or condition of this Agreement at any time shall be
deemed a waiver of such provision or condition at any prior or subsequent time
or of any other provision or condition at the same or any prior or subsequent
time.
18. Governing
Law; Arbitration.
(a)
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Texas without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
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(b)
The
parties hereto agree to submit to arbitration any and all matters in dispute
or
in controversy among them concerning the terms and provisions of this Agreement.
All such disputes and controversies shall be determined and adjudged by the
decision of an arbitrator (hereinafter sometimes called the “Arbitrator”)
selected by mutual agreement of the parties hereto or if the parties hereto
fail
to reach agreement on the Arbitrator within ten days after a party hereto has
notified the other of its interest to submit a matter to arbitration, the
Arbitrator shall be selected by the American Arbitration Association upon
application made to it for such purpose by the parties hereto. Arbitration
shall
take place in Dallas, Texas or such other place as the parties hereto may agree
in writing. The Arbitrator shall reach and render a decision in writing with
respect to the amount, if any, of payment respecting the disputed matter.
Notwithstanding anything to the contrary herein, in no event will any award
include consequential or punitive damages of any kind or nature. The arbitration
proceedings shall be held in accordance with the applicable rules of the
American Arbitration Association. Any award rendered shall be final and
conclusive upon the parties and adjudgment thereon may be entered in the highest
court of the forum, state or federal, having jurisdiction. The fees and expenses
of the Arbitrator and the respective fees and expenses of the parties hereto
in
connection with any such arbitration (including, without limitation, reasonable
fees and expenses of legal counsel and consultants) shall be paid by the party
against whom a decision by the Arbitrator is rendered.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above with the understanding that this Agreement shall constitute
a legal, valid, binding and enforceable obligation of the Company and the
Optionee, respectively.
| MANCHESTER INC. | ||
| |
|
|
| By: | /s/ | |
|
Name: Xxxxxxx Xxxxxx |
||
| Title: Corporate Secretary | ||
| OPTIONEE | ||
| |
|
|
| /s/ | Xxxxxxx Xxxxxxx | |
|
|
||
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STOCK
OPTION AGREEMENT
Notice
of Exercise
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Optionee
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Number
of Shares purchased pursuant
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to
Exercise of Option
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Exercise
Date
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Exercise
Price per Share
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Aggregate
Purchase Price
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Form
of Payment
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By
this
exercise, the Optionee agrees to (i) promptly provide such additional documents
as the Company may reasonably require and (ii) provide for the payment to the
Company (in the manner designated by the Company) of tax withholding
obligations, if any, relating to the exercise of this Option.
|
Optionee:
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| By: | ||
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Name: _____________________________________ |
||
| Title: _____________________________________ | ||
Accepted:
| By: | ||
|
Name: _______________________________________ |
||
| Title: _______________________________________ | ||
